Stock market today: Gift Nifty down 12 points; key levels for Nifty, Sensex & Nifty Bank

Indian equity benchmark indices are likely to open on a muted note on Monday after the central bank lowered interest rates and boosted liquidity in the banking sector. Caution is likely to prevail ahead of the US Federal Reserve's policy decision later this week, where the central bank of the world's largest economy is expected to cut rates.

Nifty futures on the NSE International Exchange traded 11.70 points, or 0.04 per cent, down at 26,321.50, hinting at a muted start for the domestic market on Monday. Asian shares dithered on Monday as investors bet the farm on a rate cut from the Federal Reserve this week. Nikkei and Hang Seng were trading marginally, while KOSPI inched higher.

Investors shift their attention to the US Consumer Price Index data due, a key input for the US interest-rate trajectory, said Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services. "Markets are expected to consolidate with a positive bias, supported by the RBI’s rate and liquidity actions, steady domestic flows and rising expectations of a potential US Fed rate cut."

US stocks closed out the trading week with slight gains on Friday. The Dow Jones Industrial Average rose 104.05 points, or 0.22 per cent, to 47,954.99, the S&P 500 gained 13.28 points, or 0.19 per cent, to 6,870.40 and the Nasdaq Composite advanced 72.99 points, or 0.31 per cent, to 23,578.13.

On Monday, 10-year yields were a fraction higher at 4.146 per cent having climbed 9 basis points last week. The rise in yields has helped the dollar steady after two weeks of decline, with its index holding at 99.013. The euro was steady at $1.1638 , just short of its recent seven-week high at $1.1682.

Oil prices were also supported by the chance of lower interest rates combined with geopolitical uncertainty that could limit supplies from Russia and Venezuela. Brent added 0.2 per cent to $63.85 a barrel, while US crude rose 0.2 per cent to $60.18 per barrel. Gold stood at $4,202 an ounce, while silver was just off a life-time peak.

Investors should maintain a balanced approach with a preference for large caps and sectors poised to benefit from the rate cut, said Ajit Mishra, SVP of Research at Religare Broking. "Caution is advisable in rupee-sensitive and import-heavy pockets until currency volatility stabilizes. Traders can continue with a 'buy on dips' around the key supports," he said.

Provisional data available with NSE suggest that FPIs turned net sellers of domestic stocks to the tune of Rs 4,189.17 crore on Friday. On the other hand, domestic institutional investors (DIIs) turned buyers of Indian equities to the tune of Rs 438.90 crore on a net-net basis. FPIs have pulled out Rs 11,820 crore from Indian equities in the first week of December.

The trends suggest that at higher levels FIIs will again sell since they feel that valuations are on the higher side and they can sell and invest the money in cheaper markets, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments. "In this tug of war between FIIs and DIIs, there will be days of sharp movements in the markets, in response to news and events."
 

Nifty50 & Sensex outlook

26,000/85,000 and 25,900/84,700 would act as key support zones. As long as the market is trading above these levels, the bullish sentiment is likely to continue, said Amol Athawale, VP Technical Research, Kotak Securities.

"On the higher side, 26,300/85,900 would serve as an immediate resistance level for the bulls. A successful breakout above 26,300/85900 could push the market up to 26,500/86,500. Conversely, a breach below 25,900/84,700 could change the sentiment. Below this level, the index could retest the levels of 25,750-25,700/84,200-84,000," it added.

Nifty continues to trade above key moving averages, reinforcing the broader bullish undertone A buy-on-dips approach continues to be appropriate. On the upside, immediate resistance is placed at 26,300, followed by 26,400 and 26,500, said Choice Broking. "On the downside, support is seen at 26,100, and then at 26,000, with a break below 25,850 likely to attract additional selling pressure." it said.
 

Nifty Bank outlook

Nifty appears well-positioned to extend its northward trajectory, with near-term targets at 60,400 and subsequently 61,000. On the downside, the 59,200–59,100 area remains a strong support zone against any short-term pullback, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

"We anticipate it to undergo a period of consolidation and build a foundation within the 58,500–60,100 zone in the near term The two-month rally remains well-structured within an upward channel, indicating steady buying interest even at higher levels. Key support rests at 58,300–58,600. Sustaining above this support band should preserve the short-term positive outlook," said Bajaj Broking.